Taxi industry must prepare for the eventuality of ridesharing age: Athey

Ridesharing will inevitably become a norm for transportation means and Korea’s taxi industry should find ways for survival instead of outright resisting the eventuality, said renowned economist Susan Athey at the Maekyung-KAEA Atlanta Forum on Saturday (local time).

The changes from technological advance have already reached our doorsteps, and resisting them hardly would be of any help to the individuals as well as the society, Athey, the Economics of Technology Professor at the Stanford Graduate School of Business, told the Maekyung-KAEA Atlanta Forum held on the sidelines of the American Economic Association’s annual meeting held on Jan 4-6, in Atlanta, U.S.

Korea remains one of few developed countries where ridesharing has not picked up due to vehement opposition from the taxi industry. The country’s top chat platform operator Kakao’s carpool service has been put on hold, whereas Uber and other ridesharing platforms also were forced out before they could launch their services.

In a gig economy, businesses and organizations rely more on freelancers and independent workers than permanent staffs. Uber is often referred as a good example to explain gig economy. Uber works with partners or ordinary people to run its ridesharing service business.

To become an Uber driver, one only needs to pass the company’s eligibility requirements like having a driver’s license and a car. He or she does not need to have any years of experience like a licensed taxi driver. As Uber drivers lack professional driving experience, the common perception has been that Uber drivers would underperform in service than taxi drivers.

Athey in her study, however, found that Uber offered better service at a cheaper cost than conventional taxi service based on empirical data collected in Chicago. The taxi industry needs to question itself if it is providing service befitting its fare level. She warned that suppliers often make the mistake of offering products that consumers do not want. Ridesharing service is one of the best options for customer’s welfare if one cannot afford owning a car.

Many cab drivers could lose jobs in the era of ridesharing, said Athey. It is the government’s duty to retrain them for other jobs such as caregivers who are in high demand in an aging society.

Athey also warned against technological monopoly. If only few companies end up dominating the ridesharing market, it would bring down the service quality of the whole, she said.

Athey is the first female winner of the John Bates Clark Medal, awarded by the American Economic Association to "that American economist under the age of forty who is adjudged to have made a significant contribution to economic thought and knowledge."

이미지 확대

Professor Donggyu Sul, recipient of 2019 Maekyung-KAEA Economist Award (second from the left) is posing for a group photo at the Maekyung-KAEA Atlanta Forum on Saturday (local U.S time).

On the same day, Donggyu Sul, professor of economics at the University of Texas received the 2019 Maekyung-KAEA Economist Award. Maekyung and the Korea-America Economic Association (KAEA) have been awarding Korean economists working aboard who have shown outstanding achievement in the field of economy every year since 2006.